Recent literature reaches contrasting conclusions on the ability of price/wage staggering models to generate output persistence. We derive fairly general results from a stylised log-linear model which encompasses most of the microfounded model of price/wage staggering. Our results highlight the...

Recent quantitative dynamic general equilibrium models have cast serious doubts on the explanatory power of staggered wage/price setting in accounting for both output and inflation persistence. We enlarge a dynamic general equilibrium model with staggered wages by incorporating Keynesian...

This paper analyzes the cost of disinflation under real wage rigidities in a micro-founded New Keynesian model. Unlike Blanchard and Galí (2007) who carried out a similar analysis in a linearized framework, we take non-linearities into account. We show that the results change dramatically, both...